Honda would not have invested so much in the UK if it had foreseen that the value of the euro would decline so much, reports on Wednesday said.

The company said it would not build a new manufacturing plant in Britain today because of the weakness of the euro, the single currency which the UK has not joined.

The decline of the euro, which has lost more than 30% of its value against the dollar and about 17% against the pound in less than two years, has cost the Japanese-based car giant 30bn yen ($300m), reports said.

The losses helped push Honda's European operations 18.5bn yen ($119m) into the red for the six months to the end of September.

The firm has pushed back a year to 2003 the expected date for European divisions to return to profit.

And the company says that it expects its European car sales to fall by 17% in the current financial year to 208,000.

Future of car plants

Minoru Harada, President of Honda Europe, said that the high pound was "threatening" all UK-based manufacturing companies.

Other Japanese car companies in the UK are also considering their future.

Nissan, whose Sunderland plant is among the most productive in Europe, will announce in January whether it will build the new model Micra in Britain.

And Toyota is switching much of its components purchasing to Europe to cut costs.

Some electronics companies have also said that they are reconsidering their investment in the UK.

Swindon in the spotlight

Honda insists that its �1bn Swindon plant still has a future, and will be brought up to full capacity.

But it will also reduce the amount of components its buys from UK suppliers from 75% to 50%.

Honda in September announced that it would export Civic models made in UK plants into its Japanese home market rather than to Europe.

And last month the firm chose UK operations to manufacture the next generation CR-V sports utility vehicle for export to the US.

Honda's overall production fell to 214,596 vehicle in October, 0.8% lower than the same month last year, figures on Wednesday showed.

And its domestic production plunged by 9.5% to 99,131, with exports down 21%.